Covering the Bases: Medicare Part D and the 'doughnut hole'

Amy Rubino is the director of the Senior Health Insurance Assistance Program and the Senior Medicare Patrol for the Anne Arundel County Department of Aging and Disabilities.

Amy Rubino is the director of the Senior Health Insurance Assistance Program and the Senior Medicare Patrol for the Anne Arundel County Department of Aging and Disabilities. (Capital Gazette file)

Amy RubinoCorrespondent

My understanding is that the Affordable Care Act would, in 2019, close the Medicare Part D coverage gap (aka the doughnut hole). However, when I used the Medicare website to compare drug plans for 2019, I still see the coverage gap and my costs remain substantial for my expensive brand-name insulin. Could you explain?

Medicare Part D has varying cost parameters. Let’s do a quick review as I address your question.

Every plan has a monthly premium. Premiums are the money you pay every month to carry the Part D insurance. For 2019, the premiums in Maryland range from $14 a month to $97.20 a month.

Some Part D plans have a deductible. A deductible is an amount that you must pay for your medicines before a Part D drug plan will begin paying for your medicines. The maximum deductible will be $415 for 2019. Once you meet the deductible, your Part D drug plan will help cover the cost of your medicines. Some Medicare Part D drug plans will not impose a deductible.

The next phase of Medicare Part D is called the initial coverage limit. During this phase, your drug plan will pay the majority of cost for your medicines. Your drug plan will pay approximately 75 percent of the cost of your medicines and you pay approximately 25 percent. Many plans will cover more than the 75 percent during this phase so your portion may be lower than 25 percent.

Your drug plan will be monitoring the cumulative cost of your medicines. When the cost of your medicines (the portion the plans pays plus your payments) reaches $3,820, you enter the coverage gap.

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The gap is commonly called the doughnut hole. If you enter the gap, you have will pay 25 percent of the cost of your brand-name medicines. Prior the implementation of the Affordable Care Act, a person had to pay 100 percent of the cost of their medicines in the coverage gap. The fact that a person only has to pay 25 percent during the gap is the reason the gap is considered “closed.”

You will remain in the coverage gap until one of two things happen: either the calendar year ends so you can begin a new coverage cycle, or the cumulative cost of your medicines exceeds $7,653.75 and you enter catastrophic coverage for the calendar year.

Catastrophic coverage is the “other side of the gap.” It simply means that your drug costs, for the calendar year, have been so high that the Part D drug plan will now cover almost all the medicine costs for the remainder of the year.

The cumulative cost of medicines does not mean you have to pay $7,653.75 to reach the safety net of catastrophic coverage. This number calculates what you have paid for your medicines, what the plan has paid for your medicines, plus any applicable manufacturer discounts. Once in catastrophic coverage, a person typically pays 5 percent of their medicine costs.

The coverage gap is still displaying on Medicare’s website. From your perspective, the gap is used to set your co-payment amount at 25 percent, and establish when you would be eligible for catastrophic coverage. The issue remains that if a medicine (such as brand-name insulin) is an expensive medicine, then 25 percent of that cost would remain substantial even during a “closed” coverage gap.

Amy Rubino is the director of the Senior Health Insurance Assistance Program and the Senior Medicare Patrol for the Anne Arundel County Department of Aging and Disabilities. You may contact either program at 410-222-4257 or ship_program@aacounty.org.